The business behind the show

Unable to reach a deal, Fox stations are knocked off of Cablevision Systems

October 15, 2010 | 9:55
pm

Unable to strike a new deal, the signals of News Corp.'s Fox television stations in New York and Philadelphia disappeared from roughly 3 million Cablevision Systems Corp. homes at midnight on the East Coast.

Fox and Cablevision have been unsuccessfully trying to come to terms on a new deal to keep the New York stations WNYW and WWOR on the cable operator's systems in the New York, New Jersey and Connecticut regions. Also gone from Cablevision Systems in New Jersey is the signal of Fox's Philadelphia station. The dispute includes some Fox cable channels but not the Fox News channel.

Both sides blamed the other for the signals coming off while the Federal Communications Commission expressed disappointment that no deal could be struck and that consumers would be left in the lurch. Earlier Friday, the FCC asked both companies to consider extending their talks and agreeing to have an independent mediator try to resolve their dispute. Cablevision said it was willing to do so. Fox said it was not interested in going that route. Talks between the two companies are expected to resume tomorrow afternoon.

Left in the lurch are subscribers who, if the impasse continues, will miss Fox's coverage of NFL football and the National League Championship Series, which features the Philadelphia Phillies. Fox also carries the World Series, which could include the New York Yankees. In other words, if a deal isn't struck soon, it could get very ugly.

Fox blasted Cablevision after the deadline passed, noting that this was the third time this year that a programmer's signals went off Cablevision Systems because of a dispute over programming fees.

"After days of posturing and the appearance of negotiating, they formally stopped even the pretense of negotiating at 8 p.m. –- declaring an “impasse” -– and made no further efforts toward reaching a new agreement before the expiration,” said Mike Hopkins, president of affiliate sales and marketing for Fox Networks.

Cablevision countered that News Corp. has "refused to negotiate in good faith and rejected calls from dozens of political leaders to not pull the plug and join Cablevision in binding arbitration." Charles Schueler, an executive vice president said the company demands that "News Corp. put the viewers ahead of its own greed and immediately restore these channels to our customers and agree to binding arbitration to reach a fair agreement." He then added: "What is News Corp. afraid of?”

In ads critical of News Corp. and Fox, Cablevision is saying that it currently pays $70 million a year for various Fox channels and now is being asked for $150 million. Fox has countered that Cablevision pays itself $124 million a year for its MSG sports channels, which generally have much smaller audiences than those of WNYW and WWOR.

According to people familiar with the talks, Fox wants a deal that will eventually see its channels get in the neighborhood of $1 per subscriber, per month. The long-term deal would probably start at roughly 50 cents per subscriber. A person close to Cablevision says one issue is what Fox wants for several small cable channels, such as Fox Business and National Geographic Channel, as part of a deal for the Fox stations.

"News Corp. is continuing to demand more for Fox 5 than Cablevision pays all of the other broadcast stations combined," Cablevision said.

Fox brass countered that the deal being offered to Cablevision is the same that Time Warner Cable and others have.

Both News Corp. and Cablevision are lining up political support. Several New York and New Jersey politicians were critical of Fox and asking the FCC to intervene. However there were also members of Congress telling the FCC to let the two companies resolve this on their own without government intervention.

FCC Chairman Julius Genachowski noted that "each year, thousands of agreements between broadcasters and pay-TV providers are reached without interruption of customer viewing" and added that he remains "hopeful that these two companies will do what is in the best interest of consumers and find a way quickly to resolve their differences."